For 4Q FY 2012, IRB Infra (IRB Infrastructure) reported a modest set of numbers. The
company’s revenue came in-line with expectations, but owing to better-than-expected
performance at the EBITDAM level, earnings were higher than estimates.
IRB Infra has decided to acquire 100 % stake in an operational (COD August 2009) Omallur, Salem,
Namakkal BOT road project (69 km) in accordance with its strategy to grow
inorganically.
As per the company, equity IRRs in new road project wins are worth
16 to 18 %, owing to aggressive competition witnessed in the road sector. Hence, the
company has acquired an operational BOT project where IRB is expecting equity
IRRs of 21 %.
Prima facie the acquisition looks positive for the company.
Result marginally ahead of expectations: IRB’s top line witnessed growth of 10.6%
Y o y to Rs. 848 cr, marginally ahead of our estimate of Rs. 829 cr on the back of
maintaining healthy execution pace for under-construction projects. The E&C
segment’s revenue grew by 8 % y o y to Rs. 625 cr and the BOT segment witnessed
21.3 % growth to Rs. 257 cr.
However, Surat Dahisar and Bharuch Surat are expected to face muted traffic growth for the next one year, owing to traffic diversion. On the EBITDAM front, IRB’s margin came in at 44.9 %, higher than our
estimate of 42.2 %. Depreciation came in at Rs. 102 cr, in-line with our estimate.
Interest cost came in at Rs. 150 cr, registering a jump of 7.3 % / 5.6 % on a y o y /q o q
basis.
At the earnings front, IRB reported growth of 17.1 % to Rs. 120 cr, above our
estimate of Rs. 104 cr on account of better-than-expected performance on the
EBITDAM front.
Outlook and valuation:
IRB Infra has a robust order book of Rs. 6,467 cr (2.8x FY 2012
E&C revenue, excluding O&M orders), which lends revenue visibility. For FY 2013,
NHAI has a target of 8,800 km, which it intends to award during the year.
This is likely to translate into Rs. 80,000 cr plus opportunity for developers. IRB is currently
pre-qualified to submit bids for projects worth Rs. 36,000 cr and is targeting order
inflow of Rs. 3,000 cr to 4,000 cr over FY 2013. Hence, we maintain our Buy view on
the stock with a target price of Rs. 166.
Target Price Rs.166
Investment Period 12 Months
Review by Angel Broking
Nitin Arora
022-39357800 Ext: 6842
nitin.arora@angelbroking.com
company’s revenue came in-line with expectations, but owing to better-than-expected
performance at the EBITDAM level, earnings were higher than estimates.
IRB Infra has decided to acquire 100 % stake in an operational (COD August 2009) Omallur, Salem,
Namakkal BOT road project (69 km) in accordance with its strategy to grow
inorganically.
As per the company, equity IRRs in new road project wins are worth
16 to 18 %, owing to aggressive competition witnessed in the road sector. Hence, the
company has acquired an operational BOT project where IRB is expecting equity
IRRs of 21 %.
Prima facie the acquisition looks positive for the company.
Result marginally ahead of expectations: IRB’s top line witnessed growth of 10.6%
Y o y to Rs. 848 cr, marginally ahead of our estimate of Rs. 829 cr on the back of
maintaining healthy execution pace for under-construction projects. The E&C
segment’s revenue grew by 8 % y o y to Rs. 625 cr and the BOT segment witnessed
21.3 % growth to Rs. 257 cr.
However, Surat Dahisar and Bharuch Surat are expected to face muted traffic growth for the next one year, owing to traffic diversion. On the EBITDAM front, IRB’s margin came in at 44.9 %, higher than our
estimate of 42.2 %. Depreciation came in at Rs. 102 cr, in-line with our estimate.
Interest cost came in at Rs. 150 cr, registering a jump of 7.3 % / 5.6 % on a y o y /q o q
basis.
At the earnings front, IRB reported growth of 17.1 % to Rs. 120 cr, above our
estimate of Rs. 104 cr on account of better-than-expected performance on the
EBITDAM front.
Outlook and valuation:
IRB Infra has a robust order book of Rs. 6,467 cr (2.8x FY 2012
E&C revenue, excluding O&M orders), which lends revenue visibility. For FY 2013,
NHAI has a target of 8,800 km, which it intends to award during the year.
This is likely to translate into Rs. 80,000 cr plus opportunity for developers. IRB is currently
pre-qualified to submit bids for projects worth Rs. 36,000 cr and is targeting order
inflow of Rs. 3,000 cr to 4,000 cr over FY 2013. Hence, we maintain our Buy view on
the stock with a target price of Rs. 166.
Target Price Rs.166
Investment Period 12 Months
Review by Angel Broking
Nitin Arora
022-39357800 Ext: 6842
nitin.arora@angelbroking.com
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